$800 on a day trip to the beach?? Thats insane to me.
Also never understood why anyone would you those options, they have always seemed like trap. Have some self control
this post was submitted on 30 Mar 2024
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I honestly don't understand why anyone thought "buy now pay later" was anything new. Usury is among the earliest professions.
Says "no interest", so it ain't usury
If you wait long enough to pay it back then there will be movement in the markets, so there is still going to be interest.
That only disbenefits the consumer if the economy goes through deflation. If the economy more typically sees inflation then it disbenefits the lender.
The problem isn't change in purchasing power of the funds, but death by a thousand cuts. An extra $30 a month sounds reasonable - just a dollar a day - but when you layer on several of these at once then it quickly adds up.
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A couple of weeks back there was an article making the rounds of the fediverse about how people with reasonably decent incomes were nevertheless living "paycheck to paycheck", and a number of examples were given in the article with their individual stories of woe about how they were baffled by how burdened with debt they were. Most of those stories, when you dug in with just a slightly critical eye instead of an automatic assumption of victimhood, revealed people making foolish choices to take on debt and support the maximally lavish lifestyle that they could manage.
The comment section was weird. It turned out that there were some people there who thought this was perfectly reasonable, giving examples of "necessary expenditures" from their own lives that were just as excessive when examined. If you think that building a deck or buying a new bed simply because it's "time for a new one" are necessary expenditures then it's kind of hard to be sympathetic when you complain about how you have no money for long-term savings.
Is there just some basic personality type that finds it hard to be responsible with money, or is this a failure of education somehow? I have ideas for how to help but help will be unwelcome by people who refuse to recognize that they have a problem.
simply because it’s “time for a new one”
Depends. There are probably people who say that after a few years, and others use it for 10-15 before making that exclamation. In which case the choice for a new bed is (depending on your choice) no longer a luxury expense but a maintenance one.
Is there just some basic personality type that finds it hard to be responsible with money, or is this a failure of education somehow? I have ideas for how to help but help will be unwelcome by people who refuse to recognize that they have a problem.
I think a few things come together to bring us here:
- Modern education has completely abandoned teaching personal finance to kids.
- Modern payment technology (credit cards, tap to pay, apple pay) have separated us all from the tangible feeling of spending our cash on stuff. Now we don't even swipe a card or hand over a credit card to pay for something.
- Influencers and social media create new, unrealistic expectations of lifestyle.
- Highly targeted advertising on the web, in apps, and through paid influencers and social media, finds people at their most vulnerable moments and suggests that they buy stuff. Companies are targeting the weaknesses in our psychology and it's hard to withstand that onslaught.
Edit: what I said was incorrect.
I commented there, and while I do lean towards the idea that personal finance literacy is an issue, I don't think that it's purely a matter of self-control. I don't think this is necessarily a "Bob knows that he should spend N and save X but instead spends N+X" situation. I think that some of it is that people do not really have a great idea of what they should be doing in terms of personal finance. Like, what is a reasonable amount to be spending? How much should I be spending on housing? How much should be going towards retirement? How much of an emergency buffer should I have? What should I do with money that I save?
I think the answer is in your first sentence, personal finance literacy. At least in my case reading about it, learning the basics (six months expenses emergency fund, pay credit cards in full every month, invest in ETFs..) and understand other people's strategies is all it took. Hate to say it but I owe reddit one for all that knowledge.
Ah the person that complains they had to tap into their investments because you need to periodically get a new bed and redo your deck and can't save money. Yes I got downvoted for providing basic personal finance recommendations there!
I think the problem is a combination of the things you mention, and the fact that society is just normalising stupid spending, waste of resources and spending everything you earn, if not more.
When on reddit, I was active on personal finance subs. The amount of people asking for suggestions on how to improve their budget that didn't see anything wrong with 10-12 subscriptions for shows and music, on top of astronomic phone bills, eating out etc was crazy. At least they took the first step, wrote down their expenses, and were asking for help. The bed/deck guy was just pure madness.
Yes. Absolutely there is, the personality thing. It's undiagnosed learning disabilities, ADHD or just a straight up person who would have been a well regarded hunter a different century.
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A high end sandcastle kit?
Sounds like a GREAT reason to over borrow.
I guess maybe something like this:
https://www.amazon.com/PUFFERFISH-Sand-Castle-KIT-PRO-Quality/dp/B08GYLQGKR/
high-end sandcastle kit
I mean, we built some pretty neat sandcastles as kids with our hands. Dig a hole, put the sand in front of it as a barrier, scoop up sand+water from the hole and create "drip castles" with turrets and such that harden as they dry.
If you're buying decorations, I'm thinking that it's gonna be liable to wind up with plastic decorations or something left behind.
And in that case...I mean, the kid is 2 years old. I figure that she probably wants the best for him and all, but...I've seen a lot of 2-year-olds enjoy the box that a toy came in a lot more than the toy. I dunno if his sandcastle experience is gonna be so much more awesome with some kinda kit than just experiencing and learning how wet sand acts...
Idiots spend money they don't have. News at 11.
The only purchase I'm willing to go into debt for is a house and a car. Anything else I spend on should be something I already have the money for. I don't understand how some people are willing to take out loans for miscellaneous things that aren't even necessities.
Well medical care is not house or car but needed.
For sure. I forgot to include that, since it’s a necessity after all.
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People have completely lost track of what wealth looks like and it's not their fault. Using UK numbers cause that's where I live:
- salary for a 21yo in 1970 for a white collar job: £1861 - £24k adjusted for inflation. Pretty on par with today's salary for a starting white collar job.
- price of the average house in the UK in 1970: £4378. About 3 times the above annual salary. Adjusted for inflation that's £57,491. The average price of a house in the UK right now is £260,000 after dropping from 300 due to current market. 10 Times the annual salary.
You go to work at least 8 hours a day 5 days a week, in a culture that's indoctrinating you that you should be thankful you even have these horrible work conditions and pay, you spend half of more of your income on a landlords mortgage payments + extra, and for what? So you can't even afford to buy a damn games console outright and drown your sorrows in a virtual world?
Yeah no shit their overspending, they just want to live a little of their life when they can but they can't even afford to do that.
And to everyone that's about to write "well if they would budget better" kindly fuck into the sun. First of all not everyone should be an accountant in order to live comfortably. A lot of people simply don't have the skills necessity to do it. But more important, a full time job should be enough to provide for yourself, your family (1 spouse 1 child) and a mortgage on a house or apartment suitable for this family of 3. Not because I feel like people are entitled to this, fast from it, but because this was the norm 55 years ago. This was the normal for my grandparents. Society is supposedly evolving. The first world countries where this was the norm have, supposedly, grown their economies by A LOT. How can it be possible that the majority is worse off than 55 years ago in a more modern society and in now a lot more advanced economies.
But the answer is very simple really isn't it. You can't afford a house or a car made in the last decade while the rich are having literally privatised space races. Space races were exclusively the hobbies of nuclear superpowers, funded by taxpayers. How exactly did private individuals summon up the funds to advice this?
Well, you fill in the dots...
ITT a breath of fresh air. I am not alone in having an interest in personal finance, and understanding the basics of it.
Most of my interactions on lemmy so far have been making me feel guilty (and downvoted) for saving some money like I was a dirty billionaire, and to invest in index funds, using capital to further oppress the masses.
$55,000 is good money?
Depends on where you live
Well if it isn't then more than half the country is making bad money: https://fred.stlouisfed.org/series/MEPAINUSA672N
More than half the country is making bad money! We’ve been ripped off since the 70s. There was a Time article a few years back that calculated how if wages had kept pace with productivity, like it did up until the 70s, then Americans would be $50 trillion richer. Instead that money went to the rich. The rich has scraped off the $50 trillion in wages from the working class and that’s why everyone is paycheck to paycheck.
Our country is big, and has wild variances in both cost and standard of living.
I make a bit less, and $55k would change very little other than the fact that I'd be able to get medical care. I'd still have to live 40 miles from work in an ancient apartment, I'd still be unable to go out to eat or spend money on recreation, and I'd still have to ration my grocery money pretty carefully.
Where my best friend lives, this would be cocaine and hookers every weekend kind of money. Their rent is $400, and again, they live alone.
But on the coast, you couldn't live even with several roommates. You'd be homeless.
I make $50,000 and I live alone in a 3 bedroom house (a fixer upper but decent enough) which I own in a decent part of my not even terribly small city (~50,000 people). And I live comfortably enough even though I put very little effort into budgeting. Only 3 years ago I was still living in the same house/area off of $30,000 and even that was technically livable. $55,000 in my area is decent money as long as you don't go completely wild with it and it's downright great in a dual income household. There are also areas of the contry that have an even lower cost of living than mine.
Once you get out of the metropolitan areas money usually stretches much farther.
So you shouldn't take super high interest loans to buy crap online?
Planning a day trip to the beach with her 2-year-old son last year, she spent $800 on Amazon purchases including a tent, new outfits and a high-end sandcastle kit with the BNPL provider Affirm.
Nvm it was clearly unavoidable.
That report also found Black consumers were 65% more likely to borrow on BNPL than the general population, followed by Hispanic consumers (47%) and female consumers (35%).
Also racist and sexist 🤡
So you shouldn't take super high interest loans to buy crap online?
In Netherlands they limited the maximum interest rate. Plus borrowers should check if people are credit worthy without that credit score. Basically it is assumed there are enough people who are terrible with their finances. The last bit is preferable over victim blaming.
I have a 800-810 credit score. I have positive networth. I have no mortgage, no student loans and one car loan with less than 5k left. The best interest rate on a credit card i could find was over 18%. I didn't actually apply so the rate might go lower but still, that's criminal imo.
All credit cards are 0% if you pay the balance in full every month. Then it's just a matter of if the perks are worth the fees (if that's not something you're already taking advantage of).
Edit: reworded to not use the word balance twice in different contexts.
Many of them have 'hidden' fees, annual charges etc that add up to a hefty chunk. Interestingly the credit cards offered to high net worth individuals (rich people) have much lower rates and no hidden fees, even things like automatic overdraft protection and robust identity theft protection not offered to the rest of us.
That's a fair point. Credit card companies are not our friends, and it's absolutely in character for them to try and nail us in the fine print.
For my part, I know of my annual fee and the rewards I get more than offset it (though not considerably) but it's certainly not always so clear cut.
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Credit unions offer much lower interest rates. My credit card is 10% interest, and 8% for cash advances.
Credit cards at any interest rate are stupid if you are carrying a balance. Take out a proper loan.
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I had a 7.99% fixed card for a long time. Then after having a few kids we didn’t use it for a while and I went back to look at it they had raised the rate to 15.99% (this was years ago now). We also have credit over 800. Absolute garbage (yes, I know it’s in the TOS). Dropped them and changed companies to get the same 15.99% rate with other perks since the original didn’t have any.
These CC companies seriously need more regs. They can’t be trusted to do anything in the interest of consumers and don’t deserve their business anymore, quite frankly.
Plus borrowers should check if people are credit worthy without that credit score.
I assume you mean "lenders". I mean, sure, they'll check and they have expertise in finance, but the job of a lender isn't to handle a borrower's personal finances in a sane fashion. The job of a lender is to avoid being defaulted on. Like, they'll permit the absolute maximum amount of debt that they're comfortable with, which probably is more than what a borrower should be comfortable with.
In Australia, at least at the beginning, bnpl services managed to bypass all money lending regulations based on the fact that they don't charge interest. I know that there were discussions about fixing that but haven't been following the topic in a while.
Like the other person, I also assume you meant lenders, not borrowers. Lenders WANT people that are terrible with their finances. Visa makes very little with me paying off my credit card in full every month, just some merchant fees. On the other hand plenty of Australians are in constant credit card debt and pay something like 18-22% interest on the money they borrow.
Good on the Dutch government to try and control that.
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The main issue is parents (and the school system) aren’t teaching kids about budgeting and how CCs work because they don’t know how it works either. It’s perpetuating.
It says in the article that the loans aren't high interest. They're low to no interest.
They're no interest if you make the payments, if you miss one and keep a balance they can be 30%, which is how the services make money
I'm sorry but you're wrong. The specific BNPL loans being discussed in the article really are 0% interest and don't have late fees. The entire point of the article is that this is so appealing to people that they overextend their finances to get things they don't really need, and then get stuck making payments for years.
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